BOB ABERNETHY (anchor): Now, a look at the ethical tangle surrounding the nursing home industry in Florida.

A recent U.S. government study showed that [a] low caregiver to patient ratio [in nursing homes] leads to inadequate care across the country. With its aging population, Florida is considered by many to be the face of the future. It's a grim face. Insufficient attention to patients and worse is leading to multimillion dollar lawsuits against nursing homes ... causing skyrocketing liability insurance ... and threats of closure from the operators. Lucky Severson looks at a situation that critics say is heading for a crisis.

LUCKY SEVERSON: The lines of time are etched in their weathered faces. These are Florida nursing home patients. Their average age is 85, and three out of four are women.

For many, this will be their last home.

There are about 700 nursing homes in Florida. The owners of many, if not most, say they are in serious financial trouble and may be forced to close. They say Medicare payments are too low to cover costs and make a profit. And, because of so many lawsuits, their liability insurance rates are going through the roof. True or not -- strong assertions. Usually, they point the finger at one man in particular, a very successful lawyer named Jim Wilkes, who says that most nursing homes should be closed.

JIM WILKES: Right now, we take these people and we put them in conditions that are similar to a nice prison in a "good" nursing home.

SEVERSON: Jim Wilkes is not prone to understatement, but he has made a living, actually, he's made a fortune, taking Florida nursing homes to court and winning.

WILKES: We have proven over and over and over and over again conditions that are criminal. And I've got a thousand cases pending like that right now.

SEVERSON: He has won so many cases, his firm now has 40 lawyers working in six states. Wilkes travels from state to state aboard his private jet. He is a tireless self-promoter, who peppers the airwaves with 30 second commercials.

His critics have called him an ambulance chaser and a "legal extortionist." But his fans are numerous. They include Nelson and Geri Mongiovi, who say he is a crusader who got personally involved.

GERI MONGIOVI: His grandmother was in a nursing home, and he found her, I believe the story is, nude under the bed. And that's when he decided that he was going to fight for nursing homes and care.

SEVERSON: The Mongiovis asked Wilkes to take the nursing home to court, where Nelson's mother and 53 other patients were being evicted. The Mongiovis were convinced the eviction was designed to let the nursing home bring in better paying customers. Wilkes took the case and won.

NELSON MONGIOVI: When you have someone that doesn't need to do something, but does it because he believes in it, those are the people you've got to stick with.

SEVERSON: Wilkes says he has invested over a million dollars of his own money into a coalition he formed to educate and organize senior citizens.

In one recent case, Wilkes' firm won a record 20 million dollars. It's one reason so many operators are threatening to close shop, and it's why the Florida legislature established an emergency task force to find a solution. Legislator Nancy Argenziano on Jim Wilkes.

NANCY ARGENZIANO (Florida State Legislator): I think he's a very strong advocate for what he believes in. I would like to, I think, talk to him again and say that, "look, we really have a crisis here."

SEVERSON: There is a downside to the legal assault on the Florida nursing home industry. Liability insurance rates are skyrocketing, up 400% in the past two years, on average. Some homes much higher, and 24 insurers have packed their bags and left the state.

According to the Florida Department of Insurance, only 17 companies remain. Some of those leaving say it's because of unacceptable financial results and too much litigation.

RON BUSH (Lawyer): The premiums per bed in the state of Florida are astronomical. They're off the charts right now. Compared to all other states? Compared to many other states, the companies that write insurance for long-term care facilities have been, what I would term, fleeing the state.

SEVERSON: Ron Bush's law firm represents several homes in Florida, some that are pulling out or reorganizing under bankruptcy laws.

R. BUSH: I'm firmly convinced that if we continue down that path that we are taking today, that we won't have a long-term care industry, as we presently know it, to take care of the elderly population.

SEVERSON: Most nursing homes are in the business of caring to make a profit. Nationwide, it's an 87 billion dollar industry.

R. BUSH: When you're dealing with the long-term care industry, "profit" becomes a dirty word. But this is America. I mean we're a capitalistic society.

SEVERSON: But even the nonprofit homes, like those operated by the Retirement Housing Foundation, are in trouble. Chief executive officer Joseph Laverne.